UBS positive on Tesco, Burberry

On Monday, UBS strategist Joao Toniato told investors he thought so, "but with caution".

That was because the European market had gone three-quarters of the way towards pricing in a recession, but with little indication so far that the economy was actually headed that way.

Indicators of value performance were seen as pointing to strong upside, Toniato said.

"From here we continue to focus on domestic sectors and move to apply a greater value tilt to our portfolio," he said.

As a result, the strategist upgraded his recommendation on the food retail sector from 'neutral' to 'overweight' and highlighted Tesco and Carrefour as his key 'buy' recommendations.

In parallel, he downgraded his view on consumer durables from 'overweight' to 'neutral' following the sector´s outperformance in 2015 and year-to-date.

The sector´s exposure to emerging markets and continued challenges in the region meant it was crucial to be more selective.

Toniato´s key 'sell' recommendation were: Salvatore Ferragamo and Prada, while his key 'buys' were: Burberry and LVMH.

As regarded banks, UBS said selling at then current levels did not seem justified given the long-term value it saw in the sector.

It was also too early to upgrade their view on commodities, given the risk that many 'value-traps' might be lingering.

In commodities, "remaining selective (and hence neutral) is key."